Overview
Lifetime gifting strategies let individuals transfer value to others while they are alive, with two primary goals: reduce the size of a taxable estate and deliver financial benefits to recipients now. When done correctly, gifting can cut future estate taxes, provide support to family members, and accomplish philanthropic goals — all while using legal strategies that retain degrees of control over how and when the recipient uses the funds.
In my practice working with families and business owners, the most successful gifting plans mix simple annual gifts with targeted trust-based transfers and charitable solutions. The plan you choose depends on your liquidity, estate-tax exposure, family dynamics, and tolerance for complexity.
How gifting affects taxes and control (plain language)
- Estate tax reduction: Gifts remove value from your taxable estate. Over time, repeated gifts can materially lower the estate tax your heirs might owe when you die. (IRS, Gift Tax Overview).
- Gift tax and reporting: Not all gifts trigger immediate gift tax. Many gifts fall under the annual exclusion or other exemptions; large gifts may require filing Form 709 (gift tax return) and reduce your lifetime exemption rather than create an immediate tax bill.
- Income tax consequences for the recipient: Generally, gifts are not taxable income to the recipient. However, basis carryover rules mean the recipient may inherit your cost basis for capital gains when they sell the property.
- Control: Using trusts and conditional gifts (for example, gifts with Crummey withdrawal rights or gifts into an irrevocable life insurance trust, ILIT) lets you influence the timing, use, and protection of assets after transfer.
Sources: IRS, Gift Tax Overview (irs.gov); see also our primer on [How the Federal Gift Tax Exclusion Works](
